Proton and Perodua – Kings of the Pond, Fishes of the Sea

It is a battle of the two leaders of Malaysian automotive industry – Proton Holdings Berhad (stylised PROTON) and Perusahaan Otomobil Kedua Sendirian Berhad (abbreviated as PERODUA). These two auto giants of the nation are said to be over-proud Malaysia Boleh spirit. This tremendous indigenous success however doesn't change the simple fact that these are hardly recognised globally in same greatness and prestige.

A comparison of sale success of Proton and Perodua in the domestic market started out with the launch of Perodua, which commenced in the year 1994 as a 'complement' or say, 'competitor' in other words then the leader Proton. The first Proton entry in the market with Saga Saloon in July 1985 was a failure for the company. However, later Proton captured around 46 % of the Malaysian market share with an impressive number - 24,148 cars sold in the following year. Another factor which strongly continues to play a major role in the sales of these brand cars is the National Automotive Policy (NAP), enacted by the Malaysian Government in the favor of Proton, Perodua, Naza and foreign brands with manufacturing units located in Malaysia.

Perodua is the main producer of minicars and superminis, (is way ahead Proton's shares in the similar segment of cars). Lack of diversity in Perodua's arsenal becomes the paramount reason of Perodua for long being rated second largest automobile manufacturer, not first. Although, the business ventures of Perodua have been highly successful in the previous years as compared to Proton. This may be because of the sentimental value of trust and reliability that masses of Malaysia now infer with Perodua. Year 2013 was intervening period for the two brands, when Perodua overtook Proton to be the best selling brand.

At the moment, government says that Proton, which has struggled over recent years and had been mulling over a foreign tie-in, but in the end called it off, has shown that it is capable of a successful turnaround. Exhorting the same, Prime Minister Abdullah Ahmad Badawi explained the decision at an AEAN Summit in Malaysia saying - “The idea is to give Proton a chance to turn around. Currently, the situation is different from what it was two or three years ago. Proton was in a bad situation, but now it is doing well.” Nevertheless, investors rushed to dump their shares on news of the decision, with the carmaker's stock tumbling to a 7 year low of RM4.06 ($1.18). Small volumes of Proton cars have been exported to other countries like New Zealand, United Kingdom, Australia, Philippines, Vietnam and China. UK is by far the brand's most successful export market in terms of cumulative sales volume and the brand has also been ranked among the Top 20 best-selling cars in the UK for year 1992 beating big guns like Hyundai and Seat. Due to a dearth of competitive new models, quality, cost and productivity issues as well as meagre economics of scale, Proton finds it hard to make global presence.

Surprisingly, in the United Kingdom, Perodua cars were sold by some Proton dealers who wished to attract customers seeking compact and cheaper alternatives to the Proton range. Though, the sale figures were small, later in 2009 with the introduction of the Myvi model, share rose to 32% in 2005. Perodua's current challenge is to increase the small scale of its production and introduce more new models in light of growing competition from foreign carmakers on the Malaysian market.

2015 outlook for the Malaysian auto market is under uncertainty for the reason - introduction of a new tax on goods and services (GST). As per the data released by Malaysian Automotive Association (M.A.A.), Perodua and Proton were the main controllers of the local market occupying total of 50.3 % share (as per quarter report till May, 2015).

Perodua, leading the charts, sold 17.290 cars with share at 34.0%, down 5.3 points from the previous month performance. Flip side of the game, Proton in second place settles with 8.285 vehicle sales count (-18.4%), up 5.2 points from the previous month.

Proton-Perodua is truly interesting story for Malaysians and their parallel alliance with each other is riveting. This love-hate symbiotic relationship is a perfect example of a small scale success model which cannot be globalized at any scale.